Growth vs Development Synopsis

Introduction
The present state of things represents a rapid and

quick world, specially in the context of economy.
Every other day the headlines are bustling with
facts, numbers, statistics and graphs, economists
have been giving their blood, sweat and tears in
trying to predict the upcoming financial order.
Their work is deservedly appreciated as today
being a ‘developed economy’ has become
synonymous with human growth and living
standard. However, should I be using the word
‘growth’? Or should I be using a more
comprehensive word that conveys a sense of ‘over
all’ rather than being in tunnel of numerical
obsessiveness. Growth signifies an increment in
something, its either growing or its stunted, there’s
no middle ground, its either black or white. Hence,
it becomes important to assess the qualitative
‘development’ of human life rather than just the
quantitative ‘growth’. In terms of football we call it
the ‘eye – test’ (which is a way of not relying solely
on stats to judge a player). All this written sets a
build up to my topic, ‘Whether GDP is a good
criteria to asses human development of a country’.
According to the latest amendment in calculation
of GDP [adoption of SNA-2008] it represents the
sum of value added by all its producers 1 at each
stage of production within the geographical
boundaries of a country within an year. This means
we are going to calculate the value of money spent
in making an item market worthy, generally a
country with high GDP and growth rate is seen as
developed or developing, but these numbers can
be misleading. This study aims to understand the
use of GDP as a development indicator, the
strength and weaknesses of the system and its
effects on the policy decisions and on the general
public.
1
World Bank. Metadata Glossary- World Bank DataBank
Reasearch Methodology
The research methodology involves a combination

of analysis and descriptive approaches to
synthesize insights on the limitations of GDP as a
measure of human development. Through a
systematic review, relevant articles discussing
GDP's shortcomings are identified and
summarized. Key themes, such as environmental
degradation and income inequality, are extracted,
and the efficacy of alternative metrics like the Ease
of Living Index and World Happiness Index is
assessed. This method provides a comprehensive
understanding of the challenges in measuring
development and the importance of holistic
indicators. Further, the internet is used for visiting
various websites and information is collected with
the help of various search engines pertaining to
the study of the topic.
Literature Review
Kapoor and Debiroy(2019)2: This article traces
the origins of GDP to the wartime necessities
where production was the sole criteria of survival.
While arguing that GDP has been the traditional
method, this article presents that it has failed to
take into account various peacetime aspects of
human life such as quality of life and sustainability.
Further they elaborate how GDP ignores
environmental degradation and most importantly
the income inequality. Other measures of
development that take into account variables other
than economic prosperity, like the UNDP's Human
Development Index and Bhutan's Gross National
Happiness, provide more thorough evaluations of
development. This piece gives comprehensive
arguments to highlight the shortcomings of using
GDP as a tool of development monitor.
Oxfam (2023)3: The Oxfam report highlights

India's startling economic inequality. A startling
77% of the nation's wealth is held by the richest
10% of the population, while the poorest half has
experienced very little increase in wealth.
Oxfam (2023)4 : Another report by Oxfam says

that the richest 1% made nearly twice as much as
the rest of the world put together over the last two
years, this data shows how growth rates can be
deceptive as calculation of the growth rate clubs all
players under one roof.
World Economic Forum (2018)5: The article by
WEF criticizes the use of gross domestic product
(GDP) as a measure of social success and
highlights its limitations in understanding the
complexity of modern economies. Although GDP
condenses all human activities into a single
number, it ignores the nuances of well-being and
prioritizes economic growth at the expense of
environmental sustainability, public services and
equality. In addition, GDP does not address non-
monetary contributions such as income inequality,
the shadow economy and volunteering. The paper
recommends supplementing GDP with other
indicators of well-being, equality, well-being and
environmental impact to provide a more
comprehensive assessment of social progress.
____________________________________________
2 Kapoor, A. & Debroy, B. (2019). GDP Is Not a Measure of Human Well-Being.
Harvard Business Review.
3 Oxfam. (2023). India: extreme inequality in numbers. Retrieved from
https://www.oxfam.org/en/india-extreme-inequality-numbers
4 Oxfam. (2023). Richest 1% bag nearly twice as much wealth as the rest of the world
put together over the past two years. Retrieved from https://www.oxfam.org/en/press-
releases/richest-1-bag-nearly-twice-much-wealth-rest-world-put-together-over-past-two-
years
5 Pilling, D. (2018). 5 ways GDP gets it totally wrong as a measure of our
success. World Economic Forum.
Literature Gap
While these articles recognise the problems, In my
opinion they lack solution centric approach. Some
articles briefly mention environmental concerns,
such as pollution and resource depletion, there's a
lack of detailed exploration into how GDP fails to
adequately account for the environmental costs of
economic growth, since ecology has been a
burning issue in the recent past its very important
to investigate further into it. While one article
briefly mentions the challenges GDP faces in
measuring the value of online services, there's
room for further investigation into how GDP fails to
capture the full extent of economic activity in the
digital economy.
Further, I don’t see them mentioning the non
market activities that GDP doesn’t take account of,
like household labour and other informal sector
activities. Along with this, most of the articles don’t
talk about how GDP doesn’t include the bad mental
health or psychological unhealthiness which comes
with social seclusion when you gain financial
success or the ‘show-off’ expenditure leading to
relative poverty, something which seems
pravalent in developed countries.
Research Objectives
1.Investigate alternative economic indicators
that provide a more comprehensive
assessment of sustainable economic
development.
2.Explore methodologies for quantifying the
environmental impacts of economic growth
that are currently overlooked by GDP
calculations.
3.Examine the limitations of GDP in capturing the
value of online services and digital innovation
in the modern economy.
4.Explore the relationship between economic
success measured by GDP and its impact on
mental health and social well-being,
particularly examining the phenomenon of
social seclusion associated with ‘the elites’.
5.Investigate the concept of "show-off"
expenditure and its implications for relative
poverty, particularly in developed countries
where conspicuous consumption may
contribute to social inequality and exclusion.
Research Questions
1.What are the implications of adopting
alternative economic indicators that address
the shortcomings of GDP, particularly
strategies for promoting sustainable
development, reducing inequality, and
improving overall societal well-being?
2.How do differences between countries show up
when we use GDP to measure how well their
economies and societies are doing?
3.What are the implications of excluding non-
market activities from GDP measurements?
4.What role does government policy play in
addressing the limitations of GDP as a measure
of societal progress?
5.How do changes in economic structures, such

as the rise of the gig economy and increasing
automation, impact the relevance of GDP as a
measure of economic prosperity?
Hypotheses
 Using multidimensional alternatives to the
GDP method will lead to better indication of
health of an economy in its true sense and
implementation of policies with emphasis on
income inequality, sustainable development
and societal well being.
 Excluding non-market activities from GDP
measurements will result in an incomplete
assessment of economic productivity leading to
underestimation of the contributions of other
informal sector which will lead to uneven
welfare.
 Ignorance regarding the connection of mental
health with upwards social mobility will lead to
bad social environment and will end up
harming the economy paradoxically.
 Changes in economic structures, such as the
rise of the gig economy and increasing
automation, will diminish the relevance of GDP
as a measure of economic prosperity by failing
to capture the full extent of employment
opportunities and income distribution.

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Introduction

The present state of things represents a rapid and

The research methodology involves a combination

Oxfam (2023)3: The Oxfam report highlights

Oxfam (2023)4 : Another report by Oxfam says

Harvard Business Review.

3 Oxfam. (2023). India: extreme inequality in numbers. Retrieved from

5 Pilling, D. (2018). 5 ways GDP gets it totally wrong as a measure of our

success. World Economic Forum.

5.How do changes in economic structures, such

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